Saturday 09 Oct 2021 | 18:14 | SYDNEY
Saturday 09 Oct 2021 | 18:14 | SYDNEY

Reader riposte: Australia defence hedge

3 June 2011 11:10

Marcus Burke writes:

In response to John E Angevine post 'Australia's dangerously luxurious defence hedge', a proposal for a market based solution to the problem of strategic defence. John E. Angevine has pointed out that 'Decisions taken by Australian defence policymakers will make the ADF more dependent on US military assistance in order to perform low and mid-intensity operations'. This is an aspect of the fundamental problem of nations such as Australia relying on the US for their strategic defence and often as a result skimping on their own defence spending. This is beginning to look unsustainable, given the massive long-term public debt in the US and the increasing cost of maintaining pax americana. I would like to (humbly) suggest a market-based solution to this problem.

The United States provides a valuable service in offering an effective defence guarantee to countries from Australia to South Korea to its NATO allies in Europe. What if the US simply charged all of its allies for the defensive cover it provides to them?

The current US budget is some 20% of government spending (approximately $793bn in 2010) and far outweighs any other nation's military spending. What percentage of this is actually used towards defending its allies? An estimate could surely be made (say 25%) and there would then be the question of how this is divided up between its various allies. Calculations could be based on the size and complexity of the defensive force needed for each nation, with factors such as probability of military threat (eg. South Korea) and size of the area to be protected (Australia) to be taken into account. The cost would however undoubtedly be in the tens of billions of dollars, which each protected nation would need to transfer to the US. This would make clear though what the actual costs were and potentially give these nations options about how they want to protect themselves. The system would be fairer, more transparent and would help address the US debt crisis.

Arguably, Germany and Japan do this to a certain degree already (although indirectly) through taking on a greater financial load in regard to the United Nations and foreign aid. Australia and the UK, it could be said, pay through backing the US militarily in situations that the US sees as important (such as Iraq and Afghanistan) even when there appears to be no critical interest for their nations. One of the difficulties of such an approach would be that the extent of the 'coverage' would need to be made explicit, whereas currently much of it is deliberately ambiguous (would the US really intervene if China attacked Taiwan?). But clear terms in a defence agreement could be drawn up.

And what if countries didn't want to pay? There would also of course be a free riders issue — could a landlocked country within the heart of Europe opt out? This already occurs within NATO and is tolerated to a certain degree; there would still be dangers for countries going down this path. A nation could simply build up its own defence force, spending the money internally rather than paying it to the US (although the US military, being a larger force, could offer some economies of scale). Nations could even search around for alternatives, as there could be potentially be competition for the provision of defence services — what if another country offered better or cheaper protection? This in effect occurred during the cold war, with the US and the former USSR competing for countries, particularly in Africa. It may still be happening now, with China's increasing involvement in Central Asia. In the future you could have China and the US putting in bids for a government tender for the military protection of a given nation…

All idle intellectual speculation obviously. But would it not be an interesting (and valuable) exercise to contemplate what is the true cost of US protection? And on the flipside, how much is the protection provided by the United States really worth to Australia?